Probate & Trust Law Section Conference Manual ... - Minnesota CLE

Electronic reproduction of 2011−12 Wis. Stats. database, updated to May 1, 2013.
701.06 TRUSTS
ciary other than the settlor is not subject to voluntary or involuntary
alienation. The interest in principal of such a beneficiary cannot
be assigned and is exempt from claims against the beneficiary,
but a judgment creditor, after any payments of principal have
become due or payable to the beneficiary pursuant to the terms of
the trust, may apply to the court for an order directing the trustee
to satisfy the judgment out of any such payments and the court in
its discretion may issue an order for payment of part or all of the
judgment.
(3) DISCLAIMER OR RENUNCIATION NOT AN ASSIGNMENT. A disclaimer
or renunciation by a beneficiary of part or all of his or her
interest under a trust shall not be considered an assignment under
sub. (1) or (2).
(4) CLAIMS FOR CHILD SUPPORT. Notwithstanding any provision
in the creating instrument or subs. (1) and (2), upon application
of a person having a valid order directing a beneficiary to
make payment for support of the beneficiary’s child, the court
may:
(a) If the beneficiary is entitled to receive income or principal
under the trust, order the trustee to satisfy part or all of the claim
out of part or all of payments of income or principal as they are
due, presently or in the future;
(b) In the case of a beneficiary under a discretionary trust,
order the trustee to satisfy part or all of the claim out of part or all
of future payments of income or principal which are to be made
pursuant to the exercise of the trustee’s discretion in favor of such
beneficiary.
(5) CLAIMS FOR PUBLIC SUPPORT. Notwithstanding any provision
in the creating instrument or subs. (1) and (2), if the settlor is
legally obligated to pay for the public support of a beneficiary
under s. 46.10, 49.345, or 301.12 or the beneficiary is legally obligated
to pay for the beneficiary’s public support or that furnished
the beneficiary’s spouse or minor child under s. 46.10, 49.345, or
301.12, upon application by the appropriate state department or
county official, the court may:
(a) If such beneficiary is entitled to receive income or principal
under the trust, order the trustee to satisfy part or all of the liability
out of part or all of payments of income or principal as they are
due, presently or in the future;
(b) Except as otherwise provided in par. (c), in the case of a
beneficiary under a discretionary trust, order the trustee to satisfy
part or all of the liability out of part or all of future payments of
income or principal which are to be made pursuant to the exercise
of the trustee’s discretion in favor of such beneficiary;
(c) In the case of a beneficiary under a discretionary trust who
is a settlor or a spouse or minor child of the settlor, order the trustee
to satisfy part or all of the liability without regard to whether the
trustee has then exercised or may thereafter exercise the trustee’s
discretion in favor of the beneficiary.
(5m) TRUST FOR DISABLED INDIVIDUAL. Subsection (5) does
not apply to any trust that is established for the benefit of an individual
who has a disability which has continued or can be
expected to continue indefinitely, substantially impairs the individual
from adequately providing for his or her own care or custody,
and constitutes a substantial handicap to the afflicted individual
if the trust does not result in ineligibility for public
assistance under ch. 49. A trustee of a trust which is exempt from
claims for public support under this subsection shall notify the
county department under s. 46.215 or 46.22 in the county where
the disabled beneficiary resides of the existence of the trust.
(6) SETTLOR AS BENEFICIARY. (a) Notwithstanding any provision
in the creating instrument and in addition to the remedies
available under subs. (4) and (5) where the settlor is a beneficiary,
upon application of a judgment creditor of the settlor, the court
may, if the terms of the instrument require or authorize the trustee
to make payments of income or principal to or for the benefit of
the settlor, order the trustee to satisfy part or all of the judgment
out of part or all of the payments of income or principal as they are
due, presently or in the future, or which are payable in the trustee’s
Updated 11−12 Wis. Stats. Database 2
discretion, to the extent in either case of the settlor’s proportionate
contribution to the trust.
(b) A beneficiary of a trust may not be considered a settlor
solely because of a lapse, waiver, or release of any of the following:
1. A power described under par. (c).
2. The beneficiary’s right to withdraw part of the trust property,
to the extent that the value of the property affected by the
lapse, waiver, or release in any year does not exceed the greater
of the amount in:
a. Section 2041 (b) (2) or 2514 (e), Internal Revenue Code of
1986.
b. Section 2503 (b), Internal Revenue Code of 1986.
(c) A beneficiary of a trust is not a settlor, has not made a voluntary
or involuntary transfer of the beneficiary’s interest in the
trust, or does not have the power to make a voluntary or involuntary
transfer of the beneficiary’s interest in the trust solely because
the beneficiary holds or exercises, in any capacity, any of the following:
1. A presently exercisable power to consume, invade, appropriate,
or distribute property to or for the benefit of the beneficiary
if the power is any of the following:
a. Exercisable only on consent of another person holding an
interest adverse to the beneficiary’s interest.
b. Limited by an ascertainable standard, such as health,
education, support, or maintenance of the beneficiary.
2. A presently exercisable power to appoint any property of
the trust to or for the benefit of a person other than the beneficiary,
a creditor of the beneficiary, the beneficiary’s estate, or a creditor
of the beneficiary’s estate.
3. A testamentary power of appointment.
4. A presently exercisable right described in par. (b) 2.
(d) A beneficiary of a trust is not a settlor solely because the
beneficiary is entitled to nondiscretionary distributions from the
trust.
(7) SUBSEQUENT MODIFICATION OF COURT’S ORDER. Any order
entered by a court under sub. (4), (5) or (6) (a) is subject to modification
upon application of an interested person.
(8) EXEMPT ASSETS. Assets of a trust, to the extent they are
exempt from claims of creditors under other statutes, shall not be
subject to sub. (4), (5), or (6) (a).
History: 1971 c. 66; 1977 c. 309, 418; 1985 a. 176; 1991 a. 316; 1997 a. 237; 2005
a. 216; 2007 a. 20.
Cross−reference: See s. 701.07 (3) which deals with creditors’ rights where a settlor
retains powers over a living trust.
Trust income that is income to the beneficiary under federal tax law is subject to
a child support order regardless of whether a distribution is made to the beneficiary.
Grohmann v. Grohmann, 189 Wis. 2d 532, 525 N.W.2d 261 (1995).
In not revealing that he was a trust beneficiary, a father failed to make proper financial
disclosure at the time of a divorce as was required by s. 767.127. The rationale
of Grohmann is applicable to both grantor and nongrantor trusts if there is an obligation
to report that trust’s income as one’s own because it is the obligation to report the
income that makes the income reachable for calculations of a child support obligation.
Stevenson v. Stevenson, 2009 WI App 29, 316 Wis. 2d 442, 765 N.W.2d 811,
07−2143.
701.065 Debts of decedents. (1) LIMITATIONS ON CLAIMS.
(a) 1. A trustee who has a duty or power to pay the debts of a decedent
may publish in the county in which the decedent resided, as
a class 3 notice, under ch. 985, a deadline for filing claims with the
trustee. The deadline shall be the date that is 4 months after the
date of the first insertion of the notice.
2. Except as provided in pars. (b) and (c), if the trustee satisfies
the requirements for the publication of the notice under subd.
1., all claims, including claims of the state and any subdivision
thereof, whether due or to become due, absolute or contingent, liquidated
or unliquidated, are barred against the trustee, the trust
property and any recipient of trust property unless filed with the
trustee on or before the date specified in the notice under subd. 1.
(b) Notwithstanding par. (a) 2., a claim that is not filed on or
before the date specified in the notice under par. (a) 1. is not barred
if any of the following apply:
2011−12 Wis. Stats. database updated though 2013 Wis. Act 10 and all Supreme Court Orders enacted before May 1, 2013. Statutory
changes effective on or prior to May 1, 2013 are published as currently in effect. Changes effective after May 1, 2013 are
designated by NOTES. See Are the Statutes on this Website Official? (5−1−13)